How to discount old inventory without losing control of margin

Start with money, not a percentage

“Twenty percent off” says nothing about whether the resulting price works for the business. Calculate:

• sale price;
• unit gross profit;
• gross margin percentage;
• inventory value affected;
• possible final price after other eligible discounts.

For a product priced at $80 with a recorded unit cost of $38:

Gross margin is calculated as (sale price − cost) ÷ sale price × 100. Use the markdown margin calculator to test your own inputs.

Shopify's profit reports require cost per item to be recorded for products and variants at the time of sale. That product cost may not represent every operating cost, fee, or landed expense, so set internal floors using the fuller economics your business needs.

Use two boundaries

Absolute price floor

The floor is the lowest effective selling price permitted. It is expressed in money, not merely a percentage.

Maximum discount

The cap limits how far a campaign can move from the captured original price. It protects against configuration mistakes and communicates campaign intent.

Use both. A cap alone does not account for products with different costs, and a floor alone may permit a brand-damaging percentage reduction on a high-margin product.

Test shallow before deep

If there is time to observe response, begin with the smallest step likely to matter. Stop when the campaign goal is met. Continuing to discount after success burns margin without serving the stated goal.

Check other discounts

Shopify documents how eligible product, order, and shipping discounts can combine. Product discounts apply before order discounts. Review existing promotions and test realistic carts so the final customer price—not only the stored variant price—remains acceptable.

Preserve reversibility

Capture the original price, record each change, use idempotent operations, and define what happens at campaign completion. Reversibility is a financial control, not just a convenience.

Consider non-price actions

Margin protection can also mean avoiding a markdown:

• improve product discovery;
• transfer stock to a stronger location;
• bundle with a complementary item;
• negotiate a supplier return;
• hold genuinely seasonal stock when storage economics support it.

The best discount for a fixable merchandising problem is no discount.